Can You Buy A Foreclosed Property With A VA Loan?
Author:
Ashley KilroyMar 6, 2024
•4-minute read
Sure, there’s something appealing to a shiny new house. But there are plenty of future home buyers interested in not only formerly owned homes but foreclosed ones as well.
Foreclosed homes may not sound appealing at first, but they come with advantages. For example, they usually sell below the typical price you expect, so you save money. That can be a valuable opportunity for veterans looking to get the most bang for their buck.
A VA loan from the Department of Veterans Affairs (VA) also comes with its own set of perks, which most veterans and their families can take advantage of.
But can you buy foreclosed real estate with a VA loan? Here’s what you need to know to utilize both these cost-effective options.
Can You Buy A Foreclosure With A VA Loan?
The short answer is yes, it is possible to use a VA home loan to purchase a foreclosed home. However, the property must meet the VA’s minimum property requirements to qualify for a loan. Below are the rules you need to know.
VA Rules Can Complicate Foreclosed Home Buying
When you apply for a VA home loan, your application must meet the VA’s requirements to qualify for a mortgage. These requirements are designed to protect you as the borrower, your lender, loan servicer and the VA itself.
Since the VA guarantees these loans, they take responsibility for the loan debt if you can’t pay your lender back. So, no harm comes to the mortgage provider. Likewise, the VA also creates rules that are meant to protect you as the home buyer.
These rules are called the VA minimum property requirements (MPRs). The VA created and outlined minimum property requirements for every property to abide by before loan approval to protect the interests of veterans and their families.
The main goal of the MPRs is to ensure veterans and their loved ones move into a property that is safe, sanitary and structurally sound. Here are the key requirements to know:
- The property is residential.
- The roof has no major defects.
- Major mechanical systems (such as heating, electrical and plumbing) are in good working order.
- Broken windows must be fixed or replaced.
- No defective lead-based paint. Homes built before 1978 may be assumed to have lead-based paints so any peeling paint must be scraped and repainted.
- The property is a sufficient size for basic living needs.
- The property is free of pests like termites, as well as fungus and dry rot.
- There is safe and sanitary sewage disposal.
- There is access to all-weather public or private streets.
- The property has accessible and properly vented attics/crawl spaces.
While these requirements complicate the process, they save you money in the long run. Imagine purchasing a home with a faulty deck or sta